Poor US jobs growth shows Covid Delta variant impact
The US economy added fewer jobs than expected in August as employment rose by 235,000.
The figure was well down on the 1.05 million jobs created in July, adding to fears that the recovery from the pandemic may be running out of steam.
Despite the disappointing hiring levels, the unemployment rate fell to 5.2% in August from 5.4% in July.
Economists say rising infections caused by the Delta variant have hit spending on travel, tourism and hospitality.
They also note that the Labor Department’s data was collected in the second week of August, so does not reflect the impact of hurricanes Ida and Henri in the second half of the month.
President Joe Biden said he was disappointed but defended his record on the economy, saying it was growing consistently.
“Total job creation in the first seven months of my administration is nearly double, double any prior first-year president,” he said.
“While I know some wanted to see a larger number today, and so did I, what we’ve seen this year is a continued growth, month after month in job creation.”
Seema Shah, of Principal Global Investors, called the figures “a major miss” that “screamed Delta disruption”.
She added that the Federal Reserve may have to rethink its plan to start withdrawing stimulus for the US economy this year.
“Not only did payrolls rise by less than a third of what was expected, the [labour market] participation rate was unchanged suggesting that labour supply is still struggling to recover as Covid confidence takes another hit.
“The Fed has hung its hat on the assumption that people are starting to return to work, and unfortunately today’s number will be a disappointment to them.”